The report cited a Pakistani investigator as saying that Baitullah Mehsud, a warlord from Pakistan's troubled South Waziristan region, had supplied funding for the December assassination of Bhutto.
Bhutto was murdered at an opposition rally in Rawalpindi on December 27, 2007. The attack also took the lives of more than two dozen bystanders.
"We have arrested five people in connection with the assassination of Benazir Bhutto and they have told us that Baitullah Mehsud approved the plan to kill her," Additional Inspector Chaudhry Abdul Majeed was quoted as saying.
The inspector also said the militants had killed Bhutto because of her close links to the U.S., as well as her plans to launch an anti-Taliban operation if she won the country's general election.
The general election, originally planned for January 8, was postponed until February 18 following Butto's death as a result of riots and other disturbances that subsequently broke out across Pakistan.
The allegations against Mehsud echo those made earlier by the CIA.